FCC has effectively killed the Sinclair/Tribune merger

The commission is referring disputed divestitures to an administrative law judge

A hot potato: With the FCC's inspector general still presumably looking into conflicts of interest between Chairman Ajit Pai and Sinclair Broadcast Group, commissioners have ordered a hearing of divestiture disputes in the case. Such scrutiny makes the deal essentially dead in the water and calls into question the validity Pai's alleged conflicts of interest.

Sinclair Broadcast Group has been trying for months to broker a deal to buyout Tribune Media. Engadget reports the company recently proposed to “offload” 21 stations to show officials that it was not trying to stifle competition. However, the FCC has “serious concerns” about whether the liquidation is legitimate.

Commission Chairman Ajit Pai has drafted an order that will send disputes among these stations to an administrative law judge. This move could effectively kill Sinclair’s plans for a merger.

“Based on a thorough review of the record, I have serious concerns about the Sinclair/Tribune transaction,” said Pai in a written statement. “The evidence we’ve received suggests that certain station divestitures that have been proposed to the FCC would allow Sinclair to control those stations in practice, even if not in name, in violation of the law.”

The FCC did not elaborate on what disputes were in question, but the law is clear that it cannot approve the transaction until the conflicts are settled. Unfortunately for Sinclair, the acquisition is not likely to stand up under such tight scrutiny.

"When the FCC confronts disputed issues like these … the law requires the FCC to designate the transaction for a hearing in order to get to the bottom of those disputed issues."

This latest hurdle is only one of many that the broadcaster has faced since announcing the deal over a year ago. The merger initially came under fire when democratic lawmakers Frank Pallone, Jr. and Elijah Cummings demanded an investigation into Ajit Pai’s dealings with Sinclair officials back in November of last year.

The congressmen alleged that Pai and his staff has collaborated with Sinclair to ease restrictions that would allow the buyout. At the time Pai said the accusations were “completely baseless.”

“This request appears to be part of many Democrats' attempt to target one particular company because of its perceived political views, an effort that dates all the way back to 2004 when Ranking Member Pallone, Ranking Member Cummings, and other Democrats demanded that the FCC investigate Sinclair based solely on the content of a documentary they didn't like and that hadn't even aired. Any claim that Chairman Pai is modifying the rules now to benefit one particular company is completely baseless.”

Regardless of Pai’s objections, the FCC's inspector general opened an investigation into FCC Chairman Ajit Pai and his relationships with Sinclair Broadcasting in February of this year. So far nothing has come out of the probe. However, the Commissions recent actions regarding the Sinclair merger do not indicate an atmosphere of favoritism as Pallone and Cummings suggested.

As it sits, if Sinclair Broadcast Group chooses to press forward, the deal will have to endure strict examination. When faced with a similar hearing designation order, Comcast dropped its proposed $45 billion merger with Time Warner back in 2015.